Agricultural trade

Agriculture makes an extremely important contribution to the Australian economy. However, interventions by foreign government policies in global agricultural trade are negatively impacting on Australian farmers. High tariffs can lock producers out of markets, while certain forms of subsidies may unfairly distort production and prices.

In addition to hurting Australian producers and business, these trade-distorting practices can impede global food security and imperil the livelihoods of farmers in developing nations. DFAT is working at every level — bilaterally, plurilaterally and multilaterally — to address these challenges, securing market access for Australian farmers and leading global efforts to reform agricultural trade rules to ensure they are fair and market-oriented.

The state of Australian agricultural exports

We currently export more agricultural products than we import, with around 65 per cent of Australia’s total agricultural production sent overseas.

In 2016 the value of Australia's agriculture exports was $44.7 billion — approximately 14 per cent of our total goods and services exports.

Australia's top 10 agricultural exports by value (A$ million, 2016)

Major agriculture export products

A$m in 2015

Share of total (%)

Beef

7,401

16.6

Wheat

4,853

10.9

Meat (excluding beef)

3,575

8.0

Wool

3,021

6.8

Alcoholic beverages

2,587

5.8

Sugars, molasses and honey

2,332

5.2

Vegetables

2,260

5.1

Dairy

2,216

5.0

Live animals (excluding seafood)

1,875

4.2

Fruit and nuts

1,762

3.9

Who buys our agricultural exports?

China is by far the largest importer of Australian agricultural products, accounting for 21 per cent of our total agricultural exports in 2015.

Why we need agricultural trade reform

Millions of farmers in Australia and around the world are currently being disadvantaged by trade distortions in global agriculture and food markets. Such distortions include high tariffs, which decrease or eliminate the competitiveness of foreign imports, government subsidies, which unfairly alter the costs of production, and guaranteed prices, which encourage overproduction.

These distortions increase price volatility and can mean it is government policy, and not demand and competitive advantage, that drives production decisions. This increases price volatility, damages livelihoods and threatens the food security of millions.

A major cause of agricultural trade distortions is excessive agricultural subsidies. The United States, Japan, India, China and the EU spend well over $100 billion on trade-distorting domestic support every year. This forces farmers elsewhere to compete against artificially cheap exports, or locks these farmers out of what might otherwise be lucrative markets. While the consequences of these policies are perhaps felt most acutely by farmers in developing countries, all farmers are affected, and the global economy is weaker as a result.

Governments, through the World Trade Organization's (WTO's) 1995 Agreement on Agriculture, agreed to limits and disciplines on their interventions in agricultural markets. Unfortunately these disciplines, while a solid foundation, have proven insufficient to completely eliminate trade-distorting policies in agriculture.

The chart below shows that domestic support is continuing to increase in agriculture-producing countries. There has been a particularly sharp rise in trade-distorting support in emerging economies such as India and China.

How we are reforming agricultural trade policy

To increase food security without threatening farmers’ livelihoods, the Australian Government is pursuing major agricultural trade policy reform.

Domestic initiatives

Australia has significantly reduced its own tariffs and other trade-distorting agricultural protections since the 1970s. According to the WTO, our simple average applied tariff on agriculture is only 1.2 per cent.

Financial support for Australian farmers accounts for less than two cents in every dollar they earn. This is in stark contrast to countries with a highly subsidised agricultural industry, where domestic support can be as high as 62 cents per dollar.

Low tariffs and low subsidies promote competition and productivity in our agricultural sector, helping Australian farmers provide high-quality products to the rest of the the world without the excessive trade-distorting support used by other countries.

These progressive agricultural trade policy reforms have made Australia one of the world’s most efficient agricultural producers. According to the Organization for Economic Co-operation and Development (OECD), our product support estimate (the amount that taxpayers pay to support agricultural producers) dropped from 2.7 per cent in 2012 to 1.3 per cent in 2015 — the second lowest rate of all OECD countries.

Bilateral, regional and plurilateral initiatives

Through our negotiations in bilateral, regional and plurilateral free trade agreements, we aim to improve the access of Australian exporters to lucrative markets abroad.

We also seek to improve the access Australian exporters have to foreign markets through negotiations on regional agreements like the ASEAN–Australia–New Zealand Free Trade Agreement and the Trans Pacific Partnership.

Global initiatives

The challenge of government subsidies can only be addressed globally through the WTO, where Australia as coordinator of the Cairns Group of agricultural exporting countries is pushing for a free, fair, market-oriented agricultural trading system. We meet regularly with the other Cairns Group members to share information and develop WTO negotiating positions that influence global agricultural trade reform.

In 2015 WTO Member countries agreed to a number of new export measures, the most significant of which was to remove all agricultural export subsidies. WTO Members are also showing an increased interest in reaching an agreement on trade distorting support.

The next WTO Ministerial Conference (MC11) will take place in Argentina in December 2017. As chair of the Cairns Group, Australia (through DFAT) is leading the WTO discussions on agricultural reform and is aiming to deliver an outcome on trade-distorting support at MC11.